California's billionaires tax isn't the solution, budget expert says. He blames a 'perfect storm of craziness' for this populist climate
Fortune • • nation
Key Points:
- Wharton professor and Penn Wharton Budget Model director Eric Smetters argues that wealth taxes are inefficient revenue tools that consistently underperform expectations due to behavioral economics factors and high administrative costs, citing many countries that have repealed such taxes.
- Smetters highlights that seizing wealth from billionaires would only fund the U.S. federal government for about seven to eight months, emphasizing that there is less money in ultrawealthy assets than popularly assumed.
- He recommends California pursue broader, more stable tax bases such as a large sales tax or value-added tax (VAT) rather than relying on volatile, highly progressive taxes targeting illiquid assets.
- While some critics claim PWBM biases against expansive social spending, Smetters contends the model supports
